The next 100 million users are ready? Are you?

TL;DR; NBU(New Bankable Users) + E-commerce + Payments + Logistics. Did the big guys really miss this? Move over ad-tech, the ride hailing guys may just have a better handle on this one.

Here are the thick big published statistics.

An addressable population of 210M+. Roughly 125M people under 30 years of age. 60M smart phone users and 50M Internet subscribers. 140M bio-metrically verified Sim cards and telco subscribers. A projected middle class of 160M in ten years. We see these statistics flashed every alternate day. What is the big deal, you ask?

Combine them with the following gems:

Total domestic ad-spend of $650M.

Total digital ad-spend of $100M.

Existing M-wallets transactions at $2 billion.

Branchless Banking transactions at over $6 billion.

Two big players in the digital payments space (Jazz Cash & Easy pay) who are riding momentum of existing market share, ATL and BTL campaigns and a single decade old acquisition.

One of them, a case study of how little it takes to move the needle in Pakistan if you have cash, infrastructure and timing on your side.

Incumbent Banks with no net new innovation over the last decade that translates into a dramatically new, better or more profitable business model. They just can’t break out of the box or get anything with a real bite done.

Ability to get an e-money license or tie up with a Payment systems Provider (PSP) to launch new services.

A new universal connect in the works that will allow any telco network subscriber to connect to any other telco network subscriber breaking down the walls and the moats Telcos have hidden behind for two decades.

How do you monetize this army of young willing plugged in dis-satisfied users? Users who are ready for a better customer experience and for instant fulfillment. If you are still thinking ad-tech or ad-sales both your game and your mojo are out of date.

For a cash driven market like Pakistan there are only two words that you should be thinking of when you see the above stats. One of them is payments. The other is networks or systems. Take your pick.

60 million smart phones users doing a single m-wallet transaction every day for the next 40 years of their expected lives. What if its ten transactions per day? You do the math.

The incumbents, whether banks or Telcos have already blown the opportunity. Their best efforts over 5 years of product launches and onboarding initiatives translate into 2 m-wallet transactions a year on 50% of the accounts. The remaining 50% are in zombie mode.

Time for GO-Jek, Grab or Ant Financials to look at this ecosystem as there is a world beyond South East Asia where others are distracted or dis organized. Given the ride hailing guys have already made a play for POS/delivery/last mile/ad-on services and payment mechanisms all they need is a new market with a similar product market fit and go crazy with growth.

Essentially an ecosystem play.

The ride share boom has shown already that the Pakistani folk have an affinity for these services. If someone can build an ecosystem play it will only enhance that position. Careem to date has sadly missed out on payments, given the amount of “transactions” passing through its system (locally and regionally), it has either intentionally over looked or delayed getting in this space.

They won round one in raising half a billion dollars in funding and outsmarting Uber and the transport mafia in Pakistan but rather than building on that success, have gotten fat and happy. Round two, when it comes to scale, execution, consistent service quality and customer retention has been a disaster for them.

It may just be cheaper for their larger regional rivals to buy them out and do this right. They are already making all kinds of entries to build bolt on services on top of their respective platforms.

The Indian Story

For vanilla payments, the India example is a case study on the advantages we already have when it comes to building this out. The Indian market had to build out UPI (Unified Payments Interface), we are already ahead of the curve and by just a little tweaking could enable this using 1Link.

The key in India has been a PSP backend that maintains customer information, manages and issues virtual payment addresses (VPAs), resolves VPAs to user linked bank account for an incoming payment, maintains history of transactions, logs etc. Note that currently only banks and approved technology partners of banks are allowed to run their own PSP Backend in India.

The approved Technology partner is the golden nugget here. Same/similar holds true for Pakistan yet no one has capitalized on this in its true sense.

 As of now, only banks and approved partners can operate PSP Backend. 40 Banks currently operate their own PSP Backend, which is connected to NPCINet. (National Payments Corporation of India (NPCI) the settlement agency).

In our case 1Link could arguably do this today. If only a mature, willing hungry partners builds an OTT service. The Asians seem hungrier for scale, so much so, Google made a bet on one of them just recently.

Three non-banking entities, PhonePe, BHIM, and Tez, operate as technical partners of the banks in India. In addition to building user facing apps, players operating PSP Backend can also provide business solutions to enterprises by means of exposing PSP APIs/SDK. A replicable model, with most if not all the components existing today in Pakistan.

Our banks and PSPs are not going to expose anything, besides their admission that they are late to the party.

There may still be time so that the industry reorganizes it self and get the Central Bank on their side or at the very least start building open API stacks where third parties could deploy services today.

You ask why?

Because if only the likes of GO-Jek or Grab look west from SE Asia or the Ad-tech companies look east from Mountain view or Menlo park they will realize that based on the demographic stats and the market access numbers above it is a no-brainer to enter this market.

Actually if they had been paying attention to actionable intelligence on Pakistan’s payment dynamics they would step back and first look at the money movement stats/volumes alone and then decide if they too may have missed the boat on this.

Sometimes, people don’t know what they don’t know. It is time to change that. It is great to look at Pakistan as a net 100% growing market for ad-sales by everyone, but the bigger opportunity lies in payment, commerce and the logistics space.

Think about it. If you grow commerce and logistics, it is just natural that ad-spend on line will grow. As an ad platform what more can we do to seed growth for the next two decades?

Moving from JUST payments to e-commerce

Jazz has shown, how little it takes to move the needle in this space. All it takes is one well funded player that has platform and tech experience, they had the funding part down atleast.

This is not even taking in to account the fact if some one would roll out a service and then enable in-ward remittances; potentially every android phone becomes a vessel to ship cash back instantly.

We take this one step further. Imagine if an Ali Express type service rolled out on the back of this. The ecommerce – ecosystem has already publicly proven how well e-commerce works; when executed correctly. Imagine if GOSF (Great Online Shopping Festival) or some type of Express market place was a permanent feature and the payment method always worked.

In one clean sweep, the entrant will displace most of the bad press around              e-commerce, yet still use all the underlying e-commerce partners and help              e-commerce grow leaps and bound but have a guaranteed payment system powering their own store and could work with banks and others to build loyalty as opposed to discounts to incentivize users further.

It should be a position that the folks at GO-Jek , Grab and maybe even Careem should be lining up to exploit. They already have a lot of experience with both stored value systems and services and large consumer facing apps.

Now look at this from the point of the average e-tailer not funded by corporate cash, they would get guaranteed electronic payment/settlement and less reliance on COD, thus potentially reducing returns and increasing reach. If Walmart and Target think it can work, I am sure a lot of thought has gone into this. It also gives rise to the notion of Market place of market places, allowing localized/hyper local shipping and rural access to products and people and cash and to the player who comes in an opportunity unrivaled any where else. If they happen to be in the ride hailing space it gives them last mile logistics too.

Realistically all it takes is to stitch the pieces together. Ant financial continues to be in the news, no one knows for sure what will happen, their approach is to buy a financial service provider and enter the market that way. Our South East Asian friends could take the easier route and tie up and do a technical partnership. No government with half a brain, during election year would say no to expedite some thing like this.

Sometimes I wonder with all the mental horsepower that the big boys have, what happens to the in country intel going back to Menlo Park or Mountain View? It probably gets rolled up as an ad-sales number somewhere and then rounded down due to being insignificant as a subset of the region.

We just need a fresh approach that Grab and GO-Jek have capitalized on in this region. Kudos to the Central Bank for putting out hard data all it takes is to take some intelligent views on this to be in line to capitalize from a multibillion dollar opportunity.

The next 100 million users are ready? Are you?

 

Annexures – Sources and Methods.

Branchless Banking Transaction Volume total was 746,569,386,455 PKR or 6,734,055,865 USD. (Six billion seven hundred thirty-four million fifty-five thousand eight hundred sixty-five USD)

http://www.sbp.org.pk/acd/branchless/Stats/BBSQtr-Apr-Jun-2017.pdf

M-Wallet transaction stood at 228,810,886,060 PKR or 2,063,874,192 USD (Two billion sixty-three million eight hundred seventy-four thousand one hundred ninety-two USD).

http://www.sbp.org.pk/publications/acd/2017/BranchlessBanking-Apr-Jun-2017.pdf

Ad-Spend Data from an earlier post

Special thanks to Jawwad Farid for his input, additions and corrections plus all the other nice bits.

 

Tech bandits come to Pakistan: Economic Hit[wo]men in Startup land

Pakistan has many internal and external aggressors. We cant blame every thing on external elements, as we are, ourselves to blame for letting things get out of hand. A strange thing is happening in Pakistan, in the race to the top of Tech stardom.

Before we dive in to the details, to understand what’s going on; a brief history lesson is needed. What we read in Confessions of an Economic Hit Man an autobiographical book written by John Perkins published in 2004, provides us with Perkins’ account of his career with engineering consulting firm Chas. T. Main in Boston. What we are witnessing is a page right out of the book and a chapter out of history. The aggressors are a different breed, but the methods and mandate almost similar.

 According to Perkins, his role at Main was to convince leaders of underdeveloped countries to accept substantial development loans for large construction and engineering projects that would primarily help the richest families and local elites, rather than the poor, while making sure that these projects were contracted to U.S. companies. Later these loans would give the U.S. political influence and access to natural resources for U.S. companies.[1] He refers to this as an “economic hit man.”

 In the 5 years I have been part of the larger local tech community we have seen a transition in the tech ecosystem. We went from a largely BPO and Hire-to-Build narrative to a startup hungry nation. Which is a fantastic transition to witness. Every one and every thing under the sun, progressing towards startups. The goal; to attain economic freedom and break free from middle-class shackles. That is the fantastic bit of this story. The desire, drive and success of Pakistanis trying to use the power and reach of the Internet in pursuit of their dreams is commendable. What a time to be in Pakistan.

 The not so fantastic part is, that is giving rise to a new type of technological colonialism. In the absence of domestic funding or at the right scale or without the right appreciation for the startups at home. With that, its open hunting season for foreign VCs , Funds and Angels. It is this Angel category, that is not so Angelic , once you peel the layers of the onion. (We want all the reputable VCs and Funds to come and excited by the ones reaching out to do due diligence)

Imagine this scenario: If you are a cash hungry startup, with limited access to domestic capital and un-realistic demands local of investors to take a 50-80% bite out of your equity. You are out of luck. Well typically you were, but not really. My self and many others, who are involved with mentoring the young startup community, started getting calls from eager beaver startup founders, who couldn’t contain their excitement. Just weeks prior they had given up on their dreams, they resented being in Pakistan, they thought they were being dealt with unfairly, calling into question their belief some times. A vulnerable lot. Emotionally, mentally and financially. We need to nurture them, that is where we have failed miserably.

 So what was getting them so worked up? They were calling and unanimously repeating a few names and offers of 10-100k of patient capital. They had all found their savior(s). Formerly un-heard of Angels(in the Pakistani ecosystem), mostly foreign origin(migrants them selves in their now chosen lands) and with some really prominent yet cryptic back stories. (As in you could Google them but to the unordained, they would seem fairly legit)

 Slowly but surely, seeing & seizing this opportunity from Silicon Valley and beyond, a new breed of hit[wo]men started emerging on the scene. Friendly and at first glance harmless men and women, typically multimillionaires/trust fund babies/ inheritance Angels – empathizing with the cause of Pakistan and our youth. Oh how they “believe in them” how in their own native land(s), they are the champions of causes that are challenging our Pakistan and our youth. How they want to help, “oh just do a little some thing”. I tried to ignore the misgivings I had for these types of Angels. But your “gut” is rarely wrong.

 Then an other interesting thing started to happen; this lot started traveling to Pakistan. They started identifying and socializing with what I call the bottom of the pyramid Pakistani IT folks. Not to demean any one, but the scum of the earth types, who have no real jobs, have no technical background, have never done a startup, never written a line of code, but some how show up every where and get their pictures taken. You get a fair idea, every industry has these “kalakars” we have ours, this Angelic lot started finding these “idiots” and started harvesting relationships with them. This did not happen over night.

 This too is entirely our fault, take the example of a parent who has 5 kids and plays favorite with the smartest two, the other 3 are susceptible of being naughty or just play into the hands of the less than welcome “outsiders, neighbors” etc etc. We should have watched out for our own, but we didn’t. They have 0 background in to what’s going on but they are on Whatsapp. They are living the dream, getting their pictures taken, creating and making industry events and presenting awards on subjects where they sometimes cant even spell the underlying technology let alone understand the ramifications of how they are being played. The other lot being played are CEOs from our Telcos to our Banks to our FMCGs and Govt IT bunch. You ask how? In the effort to feed the beast which is their “ego” they are championing the cause of these “kalakars”. Truly we have been trumped.

These Angelic Cyber Colonials picked up on the weakest link of the chain. They spent the better half of the last 2 years harvesting Pakistan’s cumulative equivalent of “Donald Trump supporters”. I raise my hat to them, they have single handedly with their money their gravitas and the free trips become masters of this circus of “IT Dimwits”. Given the lack of hero’s an entire breed of these folks are hero worshipers. As soon as some one familiar, reaches out to them from the West and wants to meet them; they put on their 2 sizes too small Valima Suit and show up. Slowly and gradually these “Angels” started getting invited to industry events or the lack their off, started creating with the “IT Dimwits” new events, new groups, new forums, new Whatsapp groups. With that came the condescending dis-information drive, the playing down of Pakistan and Pakistani startups along with every thing else in their way, whilst our own “village idiots”** cheered them on. Saying stuff like “Mashallah we now Have IT GURUs in Pakistan” (I am quoting from a whatsapp group). These imported gurus are cashing on the frustrations of our most vulnerable and its not just to create an “arab spring” equivalent.

These Angels are some of the worst type of people out there, they have the money the motivation and now the access to our youth to destroy and entire nation worth of rising stars and entrepreneurs, whilst leaving in their trail a sense of low self worth, self esteem and apologetic mind set. The sad part is that the one who can call out this bullshit fear the isolation within the ranks and cant live without their egos being stroked, they are the first ones to get in line to get their pictures taken, so the “Angels” are thriving.

 This proves that any one with money can get access to our most vulnerable. In this case young startup founders and the “village idiots of IT”, they are able to shape the narrative and their own glorious past stories and not a single person has fact-checked these people or their bullshit, they continue to spew hate and an agenda backed with “showing Pakistanis the way”.

 I thank them for taking the time to partake in our ecosystem. But whilst I must agree that they bring stories of and steer conversations towards building sustainable companies and ecosystems, their intent is perhaps exactly the opposite. Them downplaying Pakistani and Pakistan origin mentors and offering sage advice on domestic challenges and on mentorship is borderline arrogant without knowing the ecosystem. By flying in and meeting some folks and perhaps getting second hand info, its quite naive to think that the only veterans are the likes of them and their own friends, who actually aren’t even based here and are mostly inheritance millionaires, which no one needs to apologize for, just call a spade a spade.

 The worst part is, there are some within this lot who I am sure mean well, but they got tied up with these shallow arrogant and useless types, and are basing their view entirely on their self-hating Pakistani social circuit friends. As a participant in the ecosystem it is glaringly evident that they are cashing in on the insecurities of the “village idiots of IT”, given the fact that most their comments, engagements, awards ceremonies and media appearances are weaved around the same group of 8/10 common folks. Imagine all it takes to fuck over a large segment of our startup and investible companies, can be fuelled by 8-10 people and a few outside Angels.

 What these “Angels” are doing is not helping the ecosystem with their passive aggressive comments and observations, Facebook posts, Whatsapp rants and tweets about “oh how glorious Pakistan and Pakistani startups would be , IF only we could fix X or do what Y is doing ??? Btw we haven’t even gotten to the part where they are doling out money and advice on religion. The toxic mix gets worse, we will only focus on the money for now.

 They are talking down an entire fraternity of Pakistanis who are working very hard to build up the ecosystem by offering cheap cash in exchange for their even cheaper values.

 So like the Perkins’ account of the years gone by here’s what’s happening. These Angels are coming to town, they don’t need to convince governments any more, they need to just write checks to the Startups, before that they ensure, that they give board seats to their so called friends in Pakistan. So that their interest is protected. Their friends along with the Village Idiots, slowly but surely are government folks, people of political influence and any one in a position of power happy to take funds in exchange for favors or to be invited to Amreeka or elsewhere for “good time”. Cheap..Really cheap.

The reality is, where this money is going is in 3 very well calculated places. Grants to startups that would typically find it tough to scale, To them I say take the money and probably more. Use it to your benefit but don’t get driven by the Angels agenda.

 The second lot is the scary one, companies that have the potential to sit on and collect oodles of data on youth and youth related preferences (So startups in the hyper local and data space).To them I say, you have your entire life ahead of you, don’t sell short.

 Last but not least, retired so-called Pakistani veteran CEOs of Tech/Banking/Obsolete Multinationals and their “NEW” so called startup companies and ideas. These hit(wo)men have the right idea, they are trying to get into a parasitic relationship within the right constructs of society. The young, the under-funded and old guard, all where they can play to ego, cash or one final shot at making it big.

Startups, consider you self warned. If you see some one or some thing that looks to good to be true, it probably is. Fellow ships and foundations are the new tool of this economic warfare, run as far away from those as you can. If some thing is free, always remember you are the product.

 

“village idiots”** are those individuals who are perpetually free and clear to do any thing but work, not to be confused with the hard working startup entrepreneurs. But rather the free loaders at every award ceremony.

The Worlds Biggest Startups & The Men who run the largest Accelerator @ Scale

I bet you are thinking to your self you already know the answer to this question. If I was a betting man, I would wager that you didn’t, or at the very least it would not be your first guess any way.

Saudi Arabia doesn’t come off as easily as MTV(Mountain View) or SFO(San Francisco) or Bay Area, but you cant be blamed for it just yet. What you are seeing in the news are select choice public placements in the news.

Allowing women drivers to drive, the re opening of theatres . These items have been in the making since MbS took an active role in things. (MbS you ask ? or as lovingly referred to as HRH.Mohammad Bin Salman the Crown Prince of Saudi Arabia). None of these news items are accidental; there is a massive transition about to happen, the jury is out on the what and how and when. It has been in the works for quite some time. These are not reactionary moves to say the very least. This is the time of MbS and in line with Vision 2030  which was formally ratified  by the Saudi cabinet as the National Transformation Program, it provides a blueprint for a kingdom that offers less charity and more austerity. It calls for Saudi Arabia to reduce its dependence on the energy sector, privatize state-owned enterprises, and cut state largesse. A lot of players in Saudi Arabia, want to do the following

1) Create Quick Jobs for Locals but meaningful jobs
2) Create diversification away from oil
3) Encourage locals to get involved and out of their comfort zones
4) Create Education and vocational opportunities
5) Divert subsidies to building long term human capital as opposed to a young population reliant on the state

No one in Saudi Arabia it self wants to talk about this stuff, internet crack downs and mis-understand on both ends of the aisle. The trust deficit and wholesale non police state image will be a tough sell, albeit it has to start.

Red sea resorts  and corniche investments and re development programs are part of a longer strategy it seems but that stuff is not going to happen over night.

Here comes the other force in this game, not lesser known by any stretch of the imagination but clearly not as famous as MbS but an equalizer in the dynastic politics when it comes to social/economic reform. Mr Adel Fakeih the honorable minster of Economy and Planning.

He clearly does not have an easy task. The kingdom is on an Uber ride to modernization and diversification and we all know whats going on with Uber.

Under the belly of the beast are some phenomenal items, that you can be forgiven to have missed but the sheer importance of those is a definite sign in the changing of the guard. It is good for the Muslim world and for the world at large. Imagine your rich cousin all of a sudden had a change of heart and opposed to sponsoring or funding its brand of politics its funding startups. Three cheers.

So did you know Saudi Arabia just had its first-ever YouTube FanFest in March 2017, Pakistan it is my estimate has roughly between 30-32M Monthly Active Viewers yet we dont get that kind of love from YT. Pakistan is considered a “security risk” yet Saudia isnt, let me not get into the politics of it all. But Google understands the value of having a friendly government in place as these restrictions ease of and is putting in bucket loads of concessions and resources to make YT work in Saudi Arabia.

Based on public information peppered in press releases by the best PR Machines on the planet, Google. This is what the YT data looks like :

The number of YouTubers in the MENA region have tripled in the region in the last three years. In Saudi Arabia, watch-time has grown by 50 percent and by 65 percent on mobile in 2016. More than 50 channels in MENA have more than one million subscribers, more than 20 of those in Saudi Arabia. Last year, the kingdom witnessed a 100 percent growth in total uploads coming from Saudi Arabia. The kingdom contributed a third to the total watch-time of the MENA region in 2016. 

The key stat buried in this presser is essentially this. 1/3 total watch time in the entire mena region comes from Saudia. Any surprises, there are literally no activities in the kingdom pertaining to entertainment,  culture, theatre etc. With the vast majority of population being young and no access to open television either, YT is filling the void.

A nation whose young are diabetic, Saudi Arabia has the second highest rate of diabetes in the Middle East and is seventh highest in the world, according to the World Health Organization (WHO).The prevalence of diabetes is in Kingdom is at an alarming level Over 25 percent of the adult population is suffering and that figure is expected to more than double by 2030. Half of the people over 30 years of age are prone to diabetes.

You cant brush all this stuff under the carpet, these are life style diseases and the lifestyle must change.

So what about the worlds biggest startup and incubator and what not have you?

Look around you, Saudi Arabia is doing startup building, funding, large scale growth at state level funding with 2$T to back its ambitions. The country is both incubator and accelerator and its own largest market as a burgeoning young population emerges. In a society like Saudi Arabia, there is no real middle class, when these startups disrupt the status quo, create jobs, it will create new wealth, which will create a self sustaining ecosystem outside of the compounds of Aramco.

They have started without you and me really knowing. They are launching  a massive scale global PR effort to fix their global image. As time has told us, with enough time and money you can fix any ones reputation, look at how people were mourning Hue Hefner, living and dying on his own terms. *Go back click the reputation link and see what a reputational fix means.

So where is this opportunity for Saudi Arabia and others who want to get in on the ground floor of this soon to explode startup ecosystem? But their startups may be bigger than your startups, may even be bigger than the GDP of some countries. It will be interesting no less. Here are some things that come to mind as an outsider looking in.

  1. Al Jazeera is done in Saudi Arabia, content and news aren’t.  Saudi Arabia needs its brand of news dissemination services. It is already late to that party.
  2. With such prevalence of diabetes, if the population is too sick to do shit, thats all they will do in the end, so the stage is wide and clear for innovation in life style products that capitalize on the geographic terrain of Saudi Arabia.
  3. People are watching YouTube because its content created by their own, so a huge content play is missing in Saudia, the first person to build and dominate a Saudi brand of teen /adolescent engagement via video will rule the airwaves in any format. Digital, OTT, Linear, what ever. People are dying for content.
  4. Tech, will win big, here is why. Have you ever been to a mall in Saudi Arabia? go to a GAP, select an item, go try it in on. Oh you just realized there are no changing rooms. So what you must do is you go to the malls bathroom and try it on. So how does tech fix this, e-commerce and last mile brings products to home. TV,  home shopping, ecommerce they creates massive back end employment.
  5. An other one that baffles my mind is a huge huge play on street numbering and maps + a SaudiEx like FedEx , there is no street naming to enable parcel deliveries(At large) most of it is PBOX driven and even on google maps and other data is sparse.  The national address system a good effort in the right direction only has 3M customers and 4.5 Million registered addresses for a population of 33M people. So the journey has only started. Again there is no innovation there, its state run and bland.

Heres what wont work and why

  1. Just importing talent (many years of that already evident) since the average person cant even get to Saudi Arabia without a hassle free visa process and further immigration nightmares its not the default location for the best talent to show up. America for all its quirks works because for most of the world it is still easy to get in and stay in.
  2. Launching actual incubators and accelerators for tech alone, because who will run them? who will be part of them? where is the ecosystem, will you import your muslim brothers startups from say Pakistan or Indonesia? Then what happens? There wont be any shape shifting till Saudi Investors and investment funds go out and invest in the startups of these great nations and build investor confidence. Much like the American who then repatriate their best talent using L1 Visas. Saudis need the same, also No ITS NOT cool to hold on to my passport when I come to your country. So a lot of that has to change too.
  3. Move away from Branch Plant mentality. Look around you, every thing Saudia has is a branch plant of some big company, Toyota, Honda, GE and many more and then you add the franchises and the whole country is the SUM of other people innovations. Every entity is just a surrogate. That has to change, dollars can help change that, but it cant fix it over night. A lot of systemic change has to happen for this to really become effective. No amount of money can fix generational items over night the right strategy can fix it, no less in time.
  4. They need to be able to have outsiders operate out side of fear. Hence perception must change, people must be free and able to discuss things. That will be the first step towards building a startup culture. Saudi Aarabia doesnt need any more yes men or consultants, its already spend 1.5bn$ in 2015 on consultants.

Mckinsey already does that job really well there. According to the Financial Times, Saudi businessmen have sarcastically dubbed the Ministry of Planning as the “McKinsey Ministry.” If the pattern seems familiar, it is. The company teams up with young heirs to the throne, who are eager to make their countries’ economies conform to their vision of the future. A less palatable similarity for someone like Prince Salman is how many of the countries who drank the McKinsey Kool-Aid became epicenters of the Arab Spring. Bahrain, Egypt, Libya, Yemen — each was convulsed by demonstrations, often animated by economic grievances.

 McKinsey’s approach to reforming foreign governments is dangerously flawed. The company’s school-lunch approach to economic reform — one size fits all, regardless of appetite and culture — makes no effort to consider each country’s unique history or social background. It also fails to consider whether the recipient’s political structures are robust enough to withstand the unrest that often emanates from job losses, privatization of state-owned enterprises and social services, subsidy cuts, and increases in the cost of living.

Coming back to point 2 above. Ecosystem and Startups, you can be forgiven for missing the news of a 100bn$ fund that the Saudis have setup up along with SoftBank out of Japan. So there will seemingly be a best buy moment for Saudi Arabia and Softbank they can go to the tech candy store and make more investments like the 3BN$ one the Saudis did earlier in UBER. This is the new reality and they are the new investors in town, they will need to look beyond their shores to fuel long term growth within their shores.  The initiative they have kick started to amounts to future shock for a conservative society. Specific targets include tripling non-oil revenue by 2020, to roughly $141 billion, and the creation of 450,000 jobs outside the government sector.

So my question to  Pakistani entrepreneurs is, are you ready because a funding revolution is coming to a city near you.

“The race is not to the swift or the battle to the Strong but time and chance happen to them all”

Alibaba and its Chaalis (40) choices in Pakistan | 阿里巴巴及其在巴基斯坦的40個選擇

These days its seems like not a day goes by and some one or the other publishes a picture, a leaked story, an input a whisper about Alibaba talking to some one in the country. That in it self is fantastic and super exciting. The choices for Ali Baba are literally unlimited in what they do and I have no magic ball to foretell the future. But the implications for Pakistan will either be really good or really bad.

Lets list the public rumors in place over the past week or so.

  1. Alibabas Ant Financial services to acquire stake in Telenor Bank in Pakistan.
  2. TCS putting out pictures of Alibabas visits to Pakistan
  3. Daraz not being far behind saying again some one is buying them, this has been on going since a few months after they came in to being

 

Lets evaluate the Telenor news first, minus the percentage stakes being discussed at this stage that’s immaterial to any one unless you are a shareholder, given you are not, lets focus away from the noise.

 

So if Alibaba does buy out the stake say at 40%, what happens? Look at the shareholding structure above. Whilst the news it self will be great for Pakistan(consumer confidence etc). Just my sense is, the monies wont land here post acquisition the B.V/Dutch Hold Co will probably partake in that transaction. The company is setup for tax optimization and there is nothing wrong with that either, all businesses are setup to maximize shareholder value, there should be no apology expected from Telenor for watching out for their shareholder interest.

So all this celebration of Ant Financial coming to town, could be misguided, as it may not really have any short term benefit unless the government mandates domestic injection, then it’s a different story, given our Chinese friendship that should be a baseline ask. I neither know any info nor do I want to speculate, I am analyzing the data and facts available in the public domain.

What no one is talking about what Alibaba’s entry to Pakistan will mean for digital marketing and advertising and the potential blow it will deal to OLX, Daraz,  Classifieds online and offline and Ad-Networks like FB Audience Network and Google ADX.

You are probably wondering what the sale of shares in a Microfinance Bank has to do with advertising? You cant be blamed for wondering, its simple, some thing you have never heard of, but it is a rising tiger in the world of advertising to rival Google and FB, Its called Alimama .

Launched in November 2007, Alimama (www.alimama.com) is an online marketing technology platform that offers sellers on Alibaba Group’s marketplaces online marketing services. Now that is the real Crouching Tiger, Hidden Dragon that will come to town when/if Alibaba comes here.

Coming back to our friends at Google and FB, they don’t have an office here, they don’t have a presence, the bulk of their advertising revenue are generated through product advertising, FMCGS, CPGS, Brands, Product Pushers. The success of FB viz a vi the advertising agencies they work with, is lukewarm at best, both companies have struggled to keep the conversations ongoing with counterparts in the country. Google has been more serious with boots on the ground, FB is still enjoying the consumer play of people using credit cards to buy ads.

But where is the real commitment to operate in Pakistan a market of over 200M consumers? Perhaps we shouldn’t blame them, has any one from Government really gone to FB beyond data requests and to Google beyond resetting passwords for accounts and offered them a real stake on the ground in the country from location to access to talent to tax breaks to legal protection? If not then we will continue to wait for them to show up at our door step where as other markets that welcome them will prosper.

Look at this example from Amazon,  shopping for a city to bid for amazon to come to it to build a second head quarter. That’s what government commitment is and should be if you want to attract the best.

Given what Google has done in healthcare alone, for a country like Pakistan where Chikungunya and others abound our government should be bending over backwards to invite Verily to de-bug our cities and towns if  it is not interested in the digital play, the human life play should matter.

Lets look at what will happen, when Alibaba in any form comes to Pakistan, they aren’t going to just sit idle and away from the Marketplace business which is their core. When that comes, so will Alimama, that will wipe off the entire value from product listings and classifieds businesses and thus wipe major value of AD Exchanges but wait, there is more, none of this will happen tomorrow. Some specialized verticals may continue to operate but it will be only a matter of time till they also become irrelevant or be bought out in the process.

Google and FB have to  take notice(More FB than Google). That is a fairly tough ask when Google is rightfully busy in the region with India, their interests aligned with launching payment tech (Tez) and their Next Billion obsession. FB on the other hand lacks even the commitment to operate out of market, they roll up from SG to UAE, where the hummus isn’t playing the unifier role it should between the German-Venezuelan + Pakistani mix . The UAE based leadership team responsible for PK has probably come here less than a dozen times. Credit where its due, Google guys are practically here every other week.

If FB , had they not put partnership folks and not just hired entry level talent from this country, would eat away at least 30% of other Ad Networks existing business and probably increase their pie by an other 80%, all they had to do was pay attention, there is still time if the interest level changes. Data is great, but context is the killer, it feels strange to be preaching context to Facebook.

Even beyond FB , WhatsApp related growth could potentially outpace all other business related growth in the months and years to come, no less for that you need to come to Pakistan beyond conferences and meet real businesses and hire customer advocates that have some real experience beyond trips to incubators, it has no real material output for Pakistanis beyond photo ops. Its time for the industry to grow up. Besides pretend to be grown up and promoting  self recognition.

Google is in a far better position, but I fear all their market education that had the best of intent will be ridden out by Alibaba in weeks, months and years to come. Their(Google’s) teams have really done a stellar job to educate the market. Fb is trying hard, they had a better value proposition, its easier to market on FB. Every one uses FB no new account is needed to market, any kid can do it all you need is a credit card ( what happens when the central bank decides that it is no longer cool to loose out 45m$ in FX via card or third party transaction. Invoicing becomes key.) Hence the conversation is much easier from FBs perspective with marketers; the results on the other hand are debatable as are the conversions.

The market is missing a unified sales platform and payments, when both of those arrive, any guesses as to what will happen?

This brings me to TCS/YAYVO, from a Pakistani standpoint that deal makes the most sense for the exchequer, but from a value perspective Alibaba gets more out of buying TCS for logistics and fulfillment than it does to buy Yayvo for e-commerce. (Even if it paid 3/4x Revenues it would be a sweetheart deal)

Neither the TCS Ecommerce brand nor the way the operations are structured offer any thing that 2M$ cant replicate in 6 months. That is all it takes. TCS should be courting Alibaba to offload equity in the overall entity, e-commerce is some thing they should throw in for free. Make no mistake, Alibaba is already Pakistan’s largest e-commerce player by volume, you ask how? AliExpress.

Once FTA between China and Pakistan is sorted out, none of these brands will matter every one already knows Aliexpress, at least they get their products on time. The logistics game is a serious deal, check this out Amazon building an airline/Distro hub.

In the mean while if Alibaba wants to buy some thing to just try out and experiment, its not a bad deal to get Yayvo too. But by way of technology and talent, there is no real value to be driven from Alibaba’s perspective in buying Yayvo. Every other week, some Investment banker, market broker or some one is pitching the Yayvo deal, that is an indicator that they have run out of growth capital. Any plans of grandeur they may have had are actually on hold from the looks of things. Their SKU base is stagnant. Their systems are a mis mash, the sites performance are basic at best. So this is not going to be a tech buy for Alibaba an accu-hire for mid level talent yes for sure.

Which brings us to Daraz, perhaps Alibaba should do real due diligence there. Its simple, buy 5 products a day for a month and deliver to 5 cities a day, figure out the fulfillment ratios vs order placement and go from there. In developing markets that a better test than looking at a PowerPoint deck prepared by some one else.

Daraz will be a multi country Rocket Internet deal involving Alibaba so where-in other markets Rocket may have inherent business or operations value, in Pakistan : besides burning cash on brand building, iffy customer experiences, multiple management team exits and struggling market place/drop shipper experiments they have been consistently underwhelming consumers.

A cursory glance at  FB posts or comments on paid adverts in local publications will tell part of the story. Its not easy being the first here. Just cant blame them alone, they have done more for market making than any one locally has. User sentiment abound. I am sure some one as sophisticated as Alibaba would try to get a discount on the offer given the customer toxicity. No one does “one day sales” better than Alibaba and its singles day, just apply that metric to compute GMV and if all holds true, perhaps Daraz really has value beyond what meets the eye.

Daraz is a foreign owned venture, if Alibaba does acquire Daraz / or its parent co, that money wont see the light of day in Pakistan. Again not a great deal for Pakistan or Pakistanis, the value of the transaction will unlock offshore most likely. Long term e-commerce will come, but short term No cigar.

All these factors to one side, a real funded player in any one of these 3 domains comes to town, it will be good news long term. So heres to hoping that we at least get a true payments play first, every thing else will find its way on its own once that happens.

 

 

 

 

 

 

 

 

No way Out! Zero Sum Game.

Dynastic politics is killing us, it is killing our youth it is killing every thing in its path. The only way out is to stop caring and stop following them and stop voting for them and best of all stop watching and discussing them. Period.

We have 2 varieties in the last 5 years or so, the twitter media cell type and the non national language speaking, reading off a Roman Urdu tele-prompter type. Worse than the a** that says skoority(security). These 2 types are the self professed leaders of our past present and future. Even in death they are f***i*ng zinda. Wonder why the religious zealots haven’t come out in droves giving fatwas on the “still alive” statuses of the various cult groups.

After the Panama drama nothing has happened really, besides the fact that some other scandals to either divert attention or to keep busy, its becoming a national occupation to tie up peoples mind in meaningless banter and to reduce the national IQ far below pre partition. As Ive stated in the past, As a country, three businesses have survived the test of time in Pakistan. Politics, Military and Religion (PMR).

Where as, in the grand scheme of things we should worry about running the country. We literally have nothing to show for the last 70, we are here in spite of these moronic so called leaders, not because of them. If it was up to them we’d be bankrupt, just like they are; morally and ethically bankrupt the country would be too, so we must do some thing worth while to make the next 70 count.

I have come to the conclusion that we are too lazy for revolutions because it means getting out of our comfort zone and hoping some one else comes and does it for us. The the three pillars of PMR (Politics, Military and Religion) have basically been self balancing as they out maneuver each other for their own survival thus as a consequence the country has remained, because they need the country for their cause, but their cause is not the country.

Todays post is about the genuine problems the government and so called other powers be must look to solve or for you to read and understand that irrespective your

Irrespective of your Political alignment , you are being f**d and have been consistently f**d because no government ever or any political party has done any thing to focus on the country. The country is like a private stage where warring political factions sling mud on each other and the numb “riaya” chants them on whilst the (MR) plays referee because we let them. Just like I give startups ideas and suggestions on what problems to solve or build startups around, I am compelled to direct the attention of the idiots in power to solve the following and their followers to understand the gravity of cluster f**k we are all in.

Items that are beyond race, religion or creed that need immediate attention are:

  1. Clean Drinking water
  2. Counter measures to DAMs being built by India
  3. Internal food security before allowing the Big C(hina) or others Farm Access
  4. Power independence and short fall mediation (read non Qatri LNG)
  5. Disease Management (beyond fake plastic health cards)
  6. Industrial Pollution and Long term health damage due to an inefficient EPA (beyond handing out masks to traffic wardens)
  7. Implementation of CNIC based TAX reforms across the board(unlike selective score settling)
  8. Tax on Agriculture (so that the rich from behind bullshit stops)
  9. Figuring out foreign policy by having a foreign minister who knows some thing about foreign affairs besides having lived in a foreign country and worked at a bank till the 90s, I digress we also had a PM who was a banker, seemingly cut fantastic deals for him self in the process/*Allegedly before his PR teams start taking shots at the blog.
  10. Having some one who knows some thing about technology and has built some thing of value besides their reputation using local media to be in charge of our technology policy and be a steering force for the youth as opposed to being a mythical character yearning for the love of the PMR crew. (read selfies with politicians and of prayers and brandishing guns to show relevance to all three)
  11. Access to open market to compete against the industrial complex owned by various Pillars of PMR.

This list can have dozens of additions but a baseline is to get these 11 addressed or start a meaningful discussion.

The question to ask is that are we collectively stupid? We all know that the XYZ Minister ka bhanja whose car you like, neither paid the duty on it nor has he earned an honest days wages to understand the value of buying the car from his personal equity let alone the fact that he lives rent free.

Whilst his “rich from behind ass” rents their land to the most marginalized in society to farm a piece of land yet pay no taxes on the accrued income built on the sweat, blood and tears of the most poor. Yet we continue to hero worship and idolize these bozos. It also applies to the uncle-business man down the street whose middle name is under invoicing but he is at the forefront of the construction of the muhallay ki masjid, whilst his sons Facebook wall reads like a hustler memoir.

This must stop and the youth must stop idolizing these guys, we need better role models, not necessarily rich but who have a sound ethical grounding and are not morally bankrupted. We need to call out this bullshit where we see it. Starting from the morons who beat the lines in a Bank queue to pay bills to the guy who cuts line at airport check in because he has some uniformed dude with him. Raise your voice, no one else will, try it, its not civil dis-obedience its your right. Exercise it ask questions. Don’t become the moral police though and dont have visions of grandeur.

This culture of entitlement, waasta, juggar, hawala has to stop. Some one must step up to call it out. It must be you. We must encourage our kids to admire their teachers, their mentors and offer to be role models in every thing we do as parents, colleagues, friends, neighbors and family. As opposed to opulence, wealth, television fame etc being their role models. Till we fix that, this will remain a zero sum game for all times to come.

Sadly the generation before us was too afraid to engage with these type and because nothing was said, nothing was done(because of their own sharafat), they remained silent so first these morally bankrupted moved in to our  Cities, then Muhallas and utilimately in to our lives. This culture of badmashi and speeding cars with guards brandishing guns must stop. Cant the oh so honorable establishment not take action on limiting access to guns and display of such. They do a good job of making rules for various clubs they run, like you cant wear slippers and shorts in the clubs. Clearly this stuff is more dangerous right in the neighborhoods and streets our children call home. The likelihood of getting assaulted or harmed by nicker wearing middle aged man with slippers is far less than a thug with assault rifles carried by guards high on shit.

We must also select product to market fit in government and all other elements of the state, starting from hiring people who know what they are doing and clean up the messy system we have, because its broken from top down and bottom up.

We must also rely on market forces to allow companies to compete and grow. A cursory look from a Senate hearing in July 2016 where in newspapers of the country reported that every major commercial space had some form of the welfare trust participation in it. Take a look for your self, how will the youth of this country compete against such an  industrial complex be gainfully employed in with out an “M-background” of sorts.

So from Horse breeding, to seeds, to aircraft services, to oil, gas , power, fertilizer, cereal, food, housing schemes, leasing , insurance, education, medical , foreign direct investment outside of Pakistan  the list goes on. Can you imagine the US Marines retired or other wise or the Canadians for that matter running a horse breeding business and making breakfast cereal, so instead of Kellogs wed have Marine Cereal ? Yet we grew up eating

How did all this happen? Did we get inspired by General Mills.

The popular joke from the 60s goes that when  when Golda Meir  met with President Nixon, he told her that he would trade any three American generals for General Moshe Dayan. “Okay,” she said, “I’ll take General Motors, General Electric, and General Dynamics.

Such was the lust for the American Generals of Industry. Other versions of the story claim that he said he would trade 4  Generals and she asked for “General Mills, General Dynamics, General Motors & General Electric”. What ever the case may be it makes for an interesting story.

Was there no one else available to launch commercial businesses? Thats what I some times wonder. Clearly they are being run well at least as they are profitable and typically in a monopolistic position and making acquisitions. But I rest my case. The issue always has been that a chosen few are in control of the destiny of a lot of others , but you have the opportunity to change that. By working your way via innovation and disruption in tech. Not the political disruption, the time for that is over. But since you were wondering, here’s a LIST of all those businesses.

 So nothing is perfect, far from it, we have every conceivable business advantage going to the political types who by force or by bending the rule of law evade taxes and get undue benefits and continue to exploit information disparity in their favor; where in Gwadar will XYZ be built, then proceeding to buy land around it or getting their cement brand being sanctioned for a government project , the ways and methods are many, so how can any one else get a chance in this crony system? Its tough, but we must think it has to start somewhere, by calling out shit when we see it. For example why the f**k dont I have an oil exploration concession or and LNG Pump or Pump(s) or what about a Sugar Mill?

I am not old enough to know the historical context in person but I do have the right to find out why some thing the way it is. As do you. Without accepting the status quo.

Albeit in 1953 this was all the start of a welfare corporation to support those who had served. Zero contest on that point we must take care of our own especially who those who serve and protect. Always and forever till life eternal but no one has the right to tell me what to believe and what questions to ask or not ask.

How did a welfare trust in 1953 result in 50 commercial enterprises. Most of it by an obscure yet very powerful act namely the THE CHARITABLE ENDOWMENTS ACT, 1890.

Yup you read that right 1890. Not 1980. I mean we have to modernize and move on.

Even if that was the case then, why now  can  they not be run by a public private partnership where operationally they must be expanded like a reverse nationalization project but this time for the welfare of the masses?

If this industrial complex produces a couple of billion $s then imagine if we took our brightest, infused it into it, we would build national companies that would create un surpassed employment and innovation at scale and not be monopolistic in nature but pure enterprises benefiting all and sundry.

Now that is a proposition that would truly make us a welfare state when we have enough cash in the coffers via such private enterprise funding the rest of us. The welfare of the state before any one else, so we must work on some thing that course corrects our current state for the next 70 years. Just a thought, if welfare is the premise then all citizens are created equal.

If that is a past item in history then why must I not, the average citizen of Pakistan have the first right to apply for the right to be the CEO or Board Member of these firms ? Does welfare mean patronage on both ends of spectrum? Land allocations in service and other subsidies, and corporate jobs post retirement?

Were these companies created to provide post retirement value addition services in a country where there are youth who are un employed by the hundreds of thousands. Agreed the state must provide for post retirement benefits of service men. But through commercial enterprise. A great example is to setup a pension fund perhaps one comparable to Veterans Pension or  OTTP or OMERS

88m$ of OUR  national forex sent to Morocco to start a plant? Could those funds be used on education or health care in my own country? If welfare is the crux of the system, what about welfare for all of us , domestically?

But its all out there in the public domain, I’m neither referring to some thing new or asking a new questions the thing is, our collective memory is so short, we don’t remember any thing and we get back to our national past time of watching political stupidity on television and never come to core issues long enough to ask or inquire and or to get answers.

This stuff is available in print and online and these organizations are the fiber of our national economic activity(which by the way on its own is good for the economy at large, creating jobs and supporting trade) Just that public debate beyond text messages should be undertaken on every thing in the land that affects every one in the land.

The list of questions goes on and the answers not as much, because no one really gives a damn to ask we are so tied up with our collective misery to give a rats a**. Further any items on this have their own repercussion’s because god forbid any critique or asking questions is the equivalent of loss of valor and patriotism. All that too is in the minds of the people and the stories being sown via text books from an era gone by, in 10 years with information parity and some form of education displacement I am hopeful we will focus on building unicorns as opposed to believing in them:)

But for now for us to succeed in business at home in our families and in life at large we must call out the bullshit being served to us, we are neither indebted to any one or enslaved to one political mind set or an other, I owe nothing to any one, it is as much my country as any one else’s and I hope yours too, thus I urge you to take a stand, it has to start some where. Stand does not mean a grand stand. It means to focus your energy on productive items.

Let it start by asking the right questions and by giving up hero worship and by un-following every one on FB/Twitter/Instrgram you follow because of wealth(mostly ill gotten) because its great to see their vacation pictures or their “friends” etc. That shit is short lived, fake and at best marred with inter family and inter communal jealousies and hatred to last a life time. Its not the stuff of legends lets focus away from it. There is better stuff to be done with our time.

Time to f**ing move on and do some worth while as opposed to wait for some one to hand you an opportunity or by trying to hang around these losers in hope of getting dealt some favor or some contract or some access or some material information that will let you make a buck. Scr**w all of that, in technology you have the single largest equalizer, put your mind to good use, do some thing worth while, I guarantee all these guys will line up around the block to hang out with you. So don’t get impressed easily, write off  these *nouveau riche  as the barometer of success and take a stand for your rights starting from today, mostly by asking questions and focusing your energy on building some thing at scale. There is a way out, you must want it badly enough! Also its not an iqama in Dubai or Saudia. Onwards and forwards to building Unicorns.

 

“Wherever they may have come from, and wherever they may have gone, unicorns live inside the true believer’s heart. Which means as long as we can dream, there will be unicorns.”

Bruce Coville

Bring your ‘A’ game Pakistan

The Valley is always a unique experience. But this time around it is proving to be a fairly eye opening one. There is more capital than opportunities, for VCs to put money in. LATAM to Central Europe to China to India, to South East Asia there is a VC gold rush. No one wants to miss out and be fired in the process.

The level of fake BS is also on the up and up. Every VC I’ve met so far is focused on AI, ML in emerging markets. A vast majority of these guys are lip servicing because one or more of their peers are operating in this new space.

Frankly it sucks to see this over abundance of capital in these markets whilst there is little to none in ours. Interestingly enough the reason for this capital or the ecosystem is due to the fact that the startups of yesteryears are now the VCs. Thus solidifying the belief that we need to promote startups as best as we can to grow and scale. Plus these countries are well represented in the valley and one common thread amongst the markets where these startups come from, Google pretty much has a presence every where locally i.e an office.

Pakistan not as much. There is representation, there is interest, but some how the needle is stuck as us being a sales destination or net consumer of Google tech /service as opposed to a net producer destination. Google isn’t to blame for any of this, if any thing they are the net positive contributor to Pakistan even getting a seat at the table. Not because we don’t have interesting companies but because there is a lot to be desired with the optics. Every one I’ve met this week, was surprised that I hail from Pakistan, that there are tech startups in Pakistan, that my last Company IPOd at LSE , that we have built technology featured across Google I/O and that there is a Google supported incubator in Karachi. So far so good. The thing missing is a large scale disruptive story out of Pakistan and I do not mean political, I mean a startup story of success.

The thing is, after multiple mentorship sessions and interacting with diverse startups from across the world, the one theme that is clear, startups every where want one thing , “they want to change the game” and it starts and ends with the team at play. Ideas come and go, the people who can execute them are the real game changes, so we need to promote the right teams and enable people to think big.

An other notable thing here is camaraderie, there are clusters of close relationships, people help each other and we must borrow a page from that manual. The other not so surprising thing is the age of the founders and companies. Compared to both our ecosystem and the typical businesses heroes we celebrate in Pakistan, we need a wholesale change. Tech, really is the only thing that can create Displacement Capital and empower gains larger than the cost of input. Till we start displacing old money and old capital by creating new money and new capital at scale we are doomed. We need to think big and dream big.

(To get started with this exercise I will run “DCC- Displacement Capital Camp” in Karachi in August and get the ball rolling on this).

Our startups are no less smart and no less driven, but we need to think about solving global problems as a starting point. I met some one on the sidelines who told me they wanted to build a 5b$ company. Call it crazy talk but he got my attention, you cant build billion dollar companies if you are looking to raise 50k$. The scale has to change. The thinking has to change. Most of all the mentors and role models need to change. The ecosystem needs to get more examples of actual doers rather than self promoters, don’t get me wrong plenty of those around in the valley too. No shortage any where in the world of those types.

The thing is, resources are scarce competition is tough, for our startups to scale and grow we need to bring our ‘A’ game to the table else we will be irrelevant in the business of Unicorns.

Why you should care about Allen and Company & not Raiwind and Company

You can and will be forgiven if you didnt know any thing about Allen and Company before today. But only this once. It tells me a few things about you, the amount of online hours you are spending need a new cause, as what ever you are doing online is clearly not half as bad-ass as you think it is.

Every summer, the the tech, media, and business titans assimilate in the resort town of Sun Valley, Idaho. You ask why, they are there for investment bank Allen & Co.’s week-long conference which has been an annual ritual for 30+ years. It took them 30 years to be an overnight success no less.

This year too,  brought some of the wealthiest and most powerful people from around the world to Sun Valley once again.    Deals forged at the event in the past have included Amazon founder and CEO Jeff Bezos’ purchase of The Washington Post, and Time Warner’s ill-fated merger with AOL.

To give you an idea, the billionaires summer camp attendees’ parking lot is Friedman Memorial Airport, which was packed to capacity with 100s of Millions of dollars’ worth of jets as of midday Wednesday as the event was kicking off .

With around 85 jets, many of them Gulf Stream G650 and Bombardier Global Express models boasting wingspans of almost 100 feet and prices of $45 million to $65 million each, the airport is a private gateway to Sun Valley for most attendees, whose nondescript aircraft typically carry no logos and are often fractionally owned. Did I say this was an invitation only event?

This time around the two that stood out were  Nike and Sprint , their jets’ flashy graphics featured company logos and left no doubt as to who was in attendance. I guess if you have your own Jet you can be forgiven for this type of opulence.

The gathering is put on by the investment bank and is closed to press. It attracts an impressive array of moguls. Warren Buffett, CBS CEO Leslie Moonves, Snap Chairman Michael Lynton, Viacom Vice Chairman Shari Redstone, and Discovery CEO David Zaslav are among the names who have flocked to the resort and in the coming weeks many many more names will surface.

The gathering  included panel discussions on the state of the economy, the political divide in America, the drug epidemic, and scientific breakthroughs. Bill Gates spoke on  philanthropy.

Other speakers include Nike co-founder Phil Knight, Colombia President Juan Manuel Santos, King Abdullah II of Jordan, and General Lori Robinson, who oversees North American Aerospace Defense Command and U.S. Northern Command. (So yes it is a big deal) Past gatherings have included talks from the likes of Argentinian President Mauricio Macri, Canada Prime Minister Justin Trudeau, and former Secretary of Defense Ash Carter.
While in a parallel universe the entire machinery on our side of the planet is either trying to prove or disprove who is innocent or not. Where is our Allen and Co? We have industries and industrialists that pre date Allen and Cos 1922 foundations but thats exactly the problem.  The industries and industrialists  lack smart capital and an even worse we have a lack of companies, tech or otherwise who have either the scale or the gravitas of what is required to be globally competitive. We have some great companies, but we must not fool our selves of their paltry success against the S&P 500.
To give you perspective, here is the list of the companies with the highest Revenue Per Employee of 2016. Yes this is the revenue one employee contributes in that firm (hypothetically total revenue divided by employees). Some of our largest companies do not have total revenue equal to RPE of these firms let alone tech companies.

The table above shows the top 50 companies by Revenue Per Employee in 2016 in S&P 500.

 

This is why the Allen and Company Billionaire camp is note worthy, a host of these companies were represented there. We need our own camps, we need to start some where, it most certainly cant be f***  Raiwind. We have to get past our national obsession with “small people”, be it politicians or the forces or media personalities, we have to create our own billionaires club and not one which is created on the back of *allegedly looting innocent citizens.(* matter being           sub judice) . To create such a club we first need to dream and have ambition, that too kosher ambition , the halal variety that is not an outcome of robbing some one.

Also we have to park our national obsession of saving money vs generating money, these people did no become billionaires by saving X% of their income, they did amazing things that lead to amazing companies that led to amazing fortunes, you can not save a  7 or 8 or 9 figure net worth.  The best return on your time if you invest it in making money instead of saving money.

I see startups, people, businesses,  moms and dads, spending 30-40  hours per week doing simple household tasks, looking for deals, driving all over town and working their asses off to save  Rs 15000. Before you write me off as heartless, lets look at the flip side of the coin, If they would spend that same time and ingenuity working to generate money, they could easily lock down a potential promotion at work, if self employed add money to the bank by growing revenue using the same ingenuity and time, as I said before we need to be hustlers. All of us. Thats whats missing from our DNA, we have enough “juggar” hustle, but its real economic mind set hustle that we need.

That’s the real difference between a scarcity mindset and abundance mindset. All our lives every thing has been so scarce in our life that we have become hoarders, we hoard water, power, fuel, food and every thing in between albeit due to the likes of Raiwind and Co types, leashing economic hell for decades,  we have to totally and completely stop working so hard to hold on to a tiny slice of pie. We need to start  working on making the god damn slice bigger.  But we cant be blamed entirely as we have been conditioned this way.

The number of technology companies in the Fortune 500 has steadily increased since 1955, and this sector saw the second highest revenue growth during this period.It is also no surprise where companies are from. Take a look.

The  table above shows the growth rates of the 47 companies in this sector.

 

We need our California, we had it once in Karachi, but its been pillaged and run dry. We need a place that fosters growth, the arts, music, literature, tech and a general sense of freedom and an open and tolerant mind set in what we do and how we do it. We need to move away from minding others peoples business to using our minds to grow our own business.

We need to move away from thinking when the power going to be cut off to worrying about if our AWS account will be cut off . Its a paradigm shift that wont come, irrespective of how much electricity Raiwind and Co generate. We still have a Minister who thought Calibri like Black Berry was was a phone and not a font on national television and still kept on arguing to make his point. He is presently Minister for Law, Parliamentary Affairs and Public Prosecution.

They say a picture is worth a thousand words so for a change Ill share some for you to make up your own mind as to why the Allen and Co camp matters and why we need our own rival.

Rupert Murdoch, executive chairman of Fox News, and Lachlan Murdoch(son), co-chairman of 21st Century Fox
The Wizard of Omaha Mr Warren Buffet
Apple Ceo Tim Cook and Sr. VP of internet software and services Eddie Cue
Amazon founder Jeff Bezos
Mark Pincus CEO of Zynga
GoPro CEO Nick Woodman
SNAP Chairman Michael Lynton
CEO Ycombinator Sam Altman
Twitter COO Anthony Noto
Former Ebay CEO John Donahoe
GM IBM Watson David Kenny
CEO Discovery Communications David Zaslav
CEO GM Marry Barra
Stewart Butterfield CEO Slack
Kleiner Perkins Partner-Bing Gordon
Ceo RRE Ventures Jim Robinson
Mr Facebook
Ceo of Warner Bros Kevin Tsujihara
CEO of NextDoor Nirav Tolia and Wife Megha
Jerry Yang of Yahoo Fame

Want to know what was happening in Pakistan around the the same time whilst Allen and Co sessions were kicking off. Raiwind sessions were kicking off. Ill leave it at that and one picture to sum it up.

Raiwind and Company

Interestingly enough with all that was happening in the White House these two still made it and were taking calls from the sidelines.

Ivanka Trump and Jared Kushner on the sidelines of the Billionaires Camp

 

This is how they make sure that the show must go on. Not like our Raiwind and Co who are  obsessed with their own Incestual shit to give a damn about the rest of us. So its time we step up to the plate. No one will come and give us our Allen and Co it must rise from within. In the process clean the ( tax evading, bank loan defaulting, ECL listed, under invoicing, duty avoiding, politically motivated, morally bankrupt) filth that occupies the seat at the table in the corridors of business today and hand the reigns to those who will treat Pakistan and her subjects in a better state than they got them.

 

 

 

If only Google and Facebook knew! Trust me they know already.. The question is, do you know what they know?

For the past 5 years that I have now been back in Pakistan the hottest topic of discussion amongst techies has been the arrival of Google and Facebook in Pakistan on the ground with in country presence. Besides techies every bureaucrat angling for relevance claims they are talking to the likes of Google, FB and recently PayPal and Ali Baba.

A lot has been said, discussed, hypnotized and speculated. Let me bust some myths offer some common sense pointers around what is likely to happen and why these guys aren’t here yet. Further why it may be fairly plausible for them to be on the ground soon, but later than we hoped.

First things first, they fully know and understand what the size of the opportunity in Pakistan is. Both companies are vying for new customers/audiences/new spend. They have sort of bottomed out in the West, the now famous “Next Billion” initiative at Google “ and FB trying to put Internet in the realm of affordability for the 4.3Bn people who are not online yet are not doing it for the social good of humanity but for creating a new customer base/audience that consume what they produce.

Based on the fact that the population of the earth is currently about 7.2 billion. There are about 2.9 billion people on the Internet, give or take a hundred million. That leaves roughly 4.3 billion people who are offline and need to be put online.

Hence the relative importance of Pakistan in that context cannot be ignored. Half the population of 200M folks around 25-32 years in age, mobile phones gaining momentum as is connectivity. So it is not in Google or FBs interest to watch from the sidelines. To the trained eye, they are not at the sidelines. Any thing but.

They are both pushing the envelope, they aren’t here but they are here. Here’s a hypothesis of the Advertising Market ad-dollars being exported out of Pakistan by companies buying Google and FB ads alone. I have no way of knowing this besides trying to connect some dots and asking some probing questions and doing some time honored financial filings research by associated companies and 10k filings in the US.

Here goes:

The total Advertising Market stood at $650 Million [1] in Pakistan(Again other peoples estimates/industry reports in Pakistan). That’s basically every thing rolled up.

Google Sales Last Year Attributed $45M to sales from Pakistan* based on research and inference of data available from various filings and domestic industry trends and sizing studies.

Google is 45% of Ad spend in Pakistan and FB 45%, again based on share of voice and advertising agency research.

FB would then also safely be at $45M give or take.

That Means the remaining 10% is  All others, local + bing + yahoo + linkedin etc.

Are you ready for the real number?? So the AD SPEND is already roughly at 100M$ so all other past estimates are skewed. This may be too, but its fairly close to what the data can support today. This also means the industry’s total pie has increased and there is more to come. All the old school ways of figuring out total spend is done to keep the Tax man happy so not every thing is reported by our local agencies and ad-czars.

So all the self professed pundits of industry(age 60+  with digital ambitions) and their sizing metrics are completely off, and Google and FB are laughing all the way to the bank.

So lets evaluate whats going on, 100m$ are roughly being lost in FX transactions, with no tax being paid by FB and Google as they are not locally incorporated.(This is the government’s beef with the situation or what is being considered a loss), watch out its a matter of time the Central Bank regulating  this space soon.(But must look at the other side of the coin also)

This is how the ad-spend process works:

An average consumer with a credit card who wants to do FB marketing does it, spends 10$ or 1000$ online, using their or a friends card. They get their online campaign, FB gets their money, the Bank runs the transaction and then by magic(or rather established) settlement norms the intermediary bank settles the charges in FX.

Like vapor the FX is gone. There is no tax regime in any of this.

Same thing for Google, they have less retail customers but still do, no less if you look at the model an agency sells a client on a Google campaign, the agency in turn uses a domestic or international credit card. If the order size is larger they are on net 30 day billings in which case they proceed to wire the Money out to Google in Ireland which is the central billing.

Again. FX gone. (Not really though as it is resulting in spawning economic activity, which is what should matter to any one with half a brain)

But that is a very simplistic way to look at it. Lets look at the net effect of this, like any advertising this is arguably adding to ‘market making’ activities. Ads result in conversion of prospects to clients, who in turn spend money, which in turn drives the eco system, which in turn results in Jobs, access to information or even international clients that could result in FX coming back in(Its safe to assume that for each 45m$ outbound share, there is a 100m$+ inbound share). So from my perspective Google is likely a net FX contributor(if you look at other markets where data is more transparent and who are of a similar demographic) when you account for all the small /mid sized/large publishers and game developers and every one else in the eco system who receives money from google monthly against content or games etc. Further, the missing piece are all the Google Services that free lancers use to build products, which they then advertise, either on FB/Google/Elance/the rest, and get paid $$ for services, time, products. All that FX arguably comes back in some form or an other.

The real issue is our inability to take the conversation to Google and FB and make it economically competitive for them to enter Pakistan along with managing their plight for legal protection and liability risk.(Operational, legal and personal for staff and others based here along with intellectual property protection)

So do you really think Google or FB care that their 45M$ in earnings were taxed? They could care less. 9M$ is a rounding error for a single P&L for either of them on a given day. Then what gives?

There is an evil beast at both of these companies called “Policy” the people arent, but the role or department some times is cited even internally as such. I have met some wonderful people, they are merely doing their job.

Lets look at this in retrospect. Remember the little saga with YouTube in Pakistan. A Ban. Now imagine Google having an office in Pakistan, Imagine any thing negative happening, then imagine a mob showing up at the Google office for mob justice. See the lock down on FB posts and govt demanding FB to block folks, yea, imagine them having an office and some staffer being picked up by FIA for not blocking an account… Now do you see why they aren’t here yet. This is the stuff that causes international incidents.

All of a sudden it makes sense, why the policy group at Google or FB is unwilling to put their employees in harms way. They need legal and personal protection before they come here. They may take a risk or two here and there, but there has to be firm commitments to make the operating environment similar to India to say the least, where Google has a huge operations(Roughly 5k direct/indirect employees) base and FB is not far behind.

Not only that, look at the pay scales reflected below

Google India

FB India

So there are many facets to FB and Google, one arm is responsible for Sales and there are many others who are doing R&D, Product Development, Investments, M&A and other activities. We just don’t want a sales office, we want the real deal, the real deal will only come when there is some one in government who is  “Sane and Materially smart” who can represent the voice of the tech community and can arguably understand what needs to be done by way of incentives and legal protection to invite all these giants to come prosper in our part of the world. Not some minister who uses Gmail or has an FB account and thinks they are “with the program” because of this. We need a national level decision on this, not a provincial one. This is for the greater good of the country.

Not like Google and FB cant see their own data, they are both openly reporting that search results/ organic growth coming out of Pakistan is off the charts. So their engineering teams and others are constantly innovating to engage the audiences from far away. No one in Mountain View or Menlo Park can really understand the on ground sentiment irrespective of how many “show and tell visits” they undertake and Photo Ops( they do with government types angling for relevance, see my earlier comment on that breed,) from their Singapore or MENA offices. Interestingly enough Pakistan has less in common with the South Asian Countries and the MENA teams and their staffers from an ethnic background and a market making stand point than the guys in MTV or MP , because in the US you may find expats who actually went from a deep rooted Pakistani base and understand some of the dynamics if not all.

Our export variety ex-pats who went recently from PK to MENA or SG are typically not at a career trajectory to impact decisions at a global level within these firms from a Policy stand point. Don’t get me wrong, they are the ones because of whom we are still relevant. So a personal note of thanks to all of them.

Just that I like to call a spade a spade and put the issues out there so if some one actually makes an effort to read this they can understand what the hell is going on.FB and Google have been hiring sales, marketing and BD staffers from PK (3-7 yrs experience range) its great for us, our guys are getting exposure, but its not great for the country, because we are not placing senior talent at the companies that understand the economic value of making the case for Pakistan. From a career standpoint it opens a door for more Pakistanis to get in to these awesome firms, no doubt. But its not helping our cause.  At a deeper level it will take these guys an other 10 years to impact changes we need today)

I know of one maybe two Pakistani origin VPs at Google and Maybe an other at FB . I know 2 dozen Indian origin at both places. So the issue is not India vs Pakistan, its visibility and momentum. We have neither going for us.

Imagine a CPEC level effort was put in place by the Government to put out credible folks, who understand Tech, M&A and the legal side of the house to court Google and FB, now that would be a “real damn tabdeeli.”

Giving f***ing press statements and putting up pictures on FB accounts with captions like “successful meeting with FB” “Great talks with Google” “Pay pal coming soon” etc is all immaterial and only fuels false hope and inspires our already mis-guided youth to believe crap and to hero worship those, who are doing this for their 5 minutes of fame till they are in government and want to stay relevant at all the Diplomatic and International kitty parties.

Some other insights for all of those who think that by not being here Google and FB are missing out. Lets look at some product innovations from both of them that did not require them to be here, but had they been, the localization quantum would have been crazy.

  • Google Maps has traffic data. So guess what, every one of your android carrying members of the Google regime are voluntarily providing Google location data, by calculating tower location and average speed they turned on live traffic without needing any damn permit or permission. For all the Pakistani map companies that think they will use laws and regulation to keep Google out, best of luck. You should rather be working on localization items so that just like in India Google turns around and buys you out for some thing of value that you produce.

 

  • If you are a Telenor or Zong customer using FB, see the little sign that comes up that says, you are using FB for free. There is no such thing as a free lunch, FB is running attribution studies on you, your profile, age mix, social disposition, economic demography, because they are mapping your connection data to your profile data, they are segmenting the market and will use this info to better target ads. If some thing is free, you should quickly understand that you are the product 🙂 They have more points of info on you and your habits than your spouse.

These are some very basic examples that I didn’t have look far and wide for. If this is the level of access they have without being here we must understand the flip side of this equation. They do not need our permission to operate here, but It would be good to work with them so as to  benefit from their products, services, economic propensity to spend/invest and grow markets.

Its not like only we are at some sort of fault on the other end of the equation these companies know they can push the envelope till some thing breaks, they will then come to drawing board. They know that in economies like ours every thing is for sale, including government, legislators, policy makers for as inexpensively as a photo opp or an internship for the relatives of the “well placed”. We know from the confessions of an Economic hit man, how this new world order operates.

No less it is in our best interest to open the market the economy and let some one else in besides the boogie men of CPEC.

So when you put up the power plants and generate excess electricity you will still have one of the highest un-employment rates in the world for youth. Also instead of turning the whole nation on to an army of  Free-lancers(which does have its merits when there is an over supply of talent not when there is scarce talent or mediocre talent) it would be better to grow the organized sector where by these guys are given opportunities at careers and exposure to new and ground breaking technology. That will only happen if we invite the right kind of international firms and global firms to come invest with us jointly, for their gain and ours.

How many PHd free lancers do we know that innovated on their own, it does benefit to be part of an ecosystem. Sadly the lack of payments coming in from free lancing and the plight of these free lancers dealing with the banks is still not resolved. They are exploited and their monies held on to so the banks can make an extra buck of the interest earnings. But the frenzy continues.

Some one who has no real world training, schooling or is self taught, 9 times out of ten will not be able to compete any thing globally competitive even in the free lancing space. Not every one is born gifted to make or launch free lancing million dollar fortunes. We are at best creating an army of mediocre people who could have done better but we let them down.

I share this to demonstrate how badly our priorities are screwed. Its election year(soon), I bet if for nothing else just to be electable it may be a good strategy for some of these politicians to go out and bring one of these foreign firms home with all the modalities thought out, no short term MOU bullshit. I can assure you the youth will look up on that favorably. Even though, arguably it still is late.

[1] This data is hotly contested because the reporting agencies like Gallup and Nielsen apply various discounts on the actual rate cards, in this case the Gallup study for the year 2014 has a 65% discount applied. http://gallup.com.pk/bb_old_site/AdSpend/2014/MediaAdSpend_14.pdf

As a basis for research and discovery when these and other studies are analyzed they list digital to be 1-2% of total Spend. The overall media space is seeing increase in spend year or year as an aggregate and digital is only Growing.

Other research available online, quoting data points of size and percentage of spend circa 2013 etc also available at

http://www.cpdi-pakistan.org/wp-content/uploads/2015/02/Broadcast-Media-in-Pakistan-Hostage-to-Media-Economy.pdf

Updated Nov 30th 2017 with additional background info.

 

What I learnt at Google I/O 2017

The biggest was the realization that whilst on one end of the planet there were discussions around Tensor Flow and AI on chip, the same day glancing through the various news papers in my own home land we were still busy holding expos, international university recruitment seminars, immigration consultants promising a future abroad and various FB posts around awards and shields to the so called elite in various walks of life. A regular day in the neighborhood.

I didn’t see any stories on patents filed or any net new innovation or any Pakistani doing some thing remarkable some where in the fields of science, engineering, technology or education at home in Pakistan.

I did read about power outages and how our political regime had been told to attend a conference in Saudi Arabia while using taxpayer dollars in valuable FX that we don’t have a lot of. I wonder if some of them came to I/O it would have done them good. They would have learnt lessons on how technology is a force for democratization. But alas, they only believe in the democracy that funds their pockets.

We are doomed because of hero worship and because most of us don’t know any better. The ones masquerading or with access to resources have the scales tipped in their favor and the AWAM at best is sinking in debt.

We are truly wasting our time. But I digress.

The first thing I learnt was that the Halal and Kosher meals put Muslims and Jews in the same line up for food every day, twice a day, for three days. Else where in the world major differences of religion/political affiliation or just pure lack of knowledge would pit these two crowds against each other. But not at I/O. It was fascinating to observe that the best of civility comes through when people have a base line education and thus respect and an attitude to focus on what is important. Yes I said it right the first time, Line up, every one of the 7000 people got in line to collect their lunches and snacks.

In this case most people were at I/O with the dreams, hopes or aspirational targets of being innovators or they were innovators who were showcasing what they had done. The common thread binding them was a desire to learn or a desire to share their learning’s. Beautiful things happen when such is the case. When humility is the base line.

No one was there to show off their new Bunto jora, or to arrive in their new Mercedes and put up a show. The clear difference was that even with an all access pass I took a Lyft to the venue and walked the 2 miles to the entrance. What I/O does so well was that it democratizes all aspects of access. Every one is the same, every one has a common goal, there is shared learning no one is better than any one, only people who are willing to help others and their success is measured by the impact of their work.

This post is not about the 30+ big announcements Google made, those can be well, Googled. This is about all the things no one said and the things Pakistanis and entrepreneurs need to focus on.

Don’t get me wrong, there was a lot of wealth and wealthy people, but it was subtle. When Fei Fei Li was introduced and came out on stage the only thing I marveled at was the introduction that described what she did at Google.

Chief Scientist of AI/ML, Google Cloud it was about 5 minutes into her talk I realized the size of the Diamond on her ring, clearly visible on the giant screen only because it was catching the beautiful morning sun at the Shoreline Amphitheater. I do not intend for her to be apologetic for being successful. But the thing is, I would be equally happy if half the Banto wearing aunties could just spell Stanford as opposed to being Associate Professor of Computer Science and Head of AI.

The thing is, the rest of the world has moved on, they are conquering different beasts, whilst we are stuck in the wrong kind of game. Our aspirational target is the diamond, but not the hard work that goes in to being successful to produce minds like Fei Fei Li’s . We are happy with our under invoicing and our non tax paying nature, easily justifying it to our selves why it is ok to do so. We are hard at work but at these small time cons.

Plus we are easy to judge “she must have married rich” btw her husband Silvio Savarese, is an Assistant Professor of Computer Science at Stanford University and director of the SAIL-Toyota Center for AI Research at Stanford with research interests including computer vision, robotic perception and machine learning J . Perhaps the reverse could also hold true in this case.

An other key component of I/O was that seasoned entrepreneurs with multi million and billion dollar exits were in the code lab sessions and sand box sessions asking questions as aggressively as the next guy. They may have done it before but the still hunger for more, it is this drive – that separates them from the rest of us.

I also learnt that the world is moving away from ride hailing service clones and airbnb clones and away from drop ship technologies. People are trying to solve challenges of speed and challenges around bringing the next billion people online. People whose first device will be a low end smart phone, whose needs, wants and experiences will be fundamentally different from the vast majority of the English speaking internet users from the West. So its time to solve for that challenge. There is no need for yet an other ratings app, a ticket app, an e-commerce comparison site etc etc.

There is still hope, Pakistani innovators have done a phenomenal job in the valley no less. But we need more of those, they have been successful in spite of their challenges and not because of any concessions being afforded to them for being Pakistani.

For our part of the world we need technologies that help bringing affordable health care, technologies that exploit smart phones to make remote health care affordable and universal. Technologies that bring education to the masses in the languages they know already. Technologies that solve problems vs technologies that incrementally make life better. The next billion are not looking for incremental change, they are looking for fundamental change. Lets put our energies to solve for things that address those challenges.

I was compelled to share my views because this morning the first thing I saw on TV was a feature on college students from a tier 2 city on an equally local/regional channel around an exhibition the students were doing. Predominantly girls, they had used recycled house hold goods(boxes, rope, plastic spoons) to make models of rural and urban scenes and an Army camp. The first thing I thought of was how badly we had let down these kids because every one of them being interviewed shared how proud they were of our armed forces (no reason to not be proud) and how their camp and model showed how brave they were(I still didn’t get how a stick and paper tent showed that). Not a single one of them could explain what their exhibition was about.

A Project of this nature would be apt for the 4th grade not to be on TV no less and that too at the college level. We have a long road ahead. It has to start some where. The world has a clear and distinct lead on us so unless we use technology, common sense and a whole sale educational and political reform to bridge the gap, we will not even be qualified to run call centers in the next few years because AI and ML would have dibs on that work too.

 

 

 

 

 

 

Power of the Executive Order, how the government killed entrepreneurship from NERO to NRO

NERO – Nationalization and Economic Reforms Order (1st Jan 1972)

On 1 January 1972, in a speech to the nation, Bhutto and the peoples party’s government promulgated the three-staged program, under “Nationalization and Economic Reforms Order (NERO)”, which nationalized all major metal industries, including iron and steel, heavy engineering, heavy electrical, petrochemicals, cement and public utilities except textiles industry and lands. The first stage of the nationalization program integrated approximately 31 major industrial mega corporations, industrial units and enterprises, under direct management control of the government under 10 different categories of basic industries. The program intended to assert public ownership over the industrial mega corporations.

NRO- National Reconciliation Order (5th Oct 2007)

It granted amnesty to politicians, political workers and bureaucrats who were accused of corruption, embezzlement, money laundering, murder, and terrorism between 1 January 1986, and 12 October 1999, the time between two states of martial law in Pakistan.

For a quick historical perspective the 22 Families who owned these businesses pre nationalization were essentially driven out of business, for the state to take over business. Irrespective of what one thinks of these families, their claims to fame or the equality of wealth, the external narrative at the time was as follows and sadly not much has changed.

Since we have no national database that I know of, to do an evaluation of the entrepreneurial ecosystem in Pakistan from the time of independence to date, the recent de classification of the CIA documents has provided a nice treasure trove for history buffs. Albeit how much you read into these documents is a personal choice. About 13 million pages of declassified documents from the US Central Intelligence Agency (CIA) have been released online Jan 18th 2017. The above snippets come from there.

 

 

Not much has changed, the government decided to take action then to repatriate alleged funds and savings over seas and to try a method of equalizing the playing field by curtailing influence of those in business and theoretically spawning economic growth.Sadly most of it didn’t happen that way. Further the Government of Bhutto collapsed and we were in a state of martial law, clearly not much innovation was happening then either.

But we fast forward to 2007 and essentially any one who was in a position to dominate, influence, execute, political or business control by either being in or by being in a position to manage positive outcomes for them selves and their clans got a clean chit and their cases were dropped by the NAB. The National Accountability Bureau (NAB) presented a list of 248 politicians and bureaucrats to the government, whose cases were cleared by NAB due to NRO. That’s 248 folks who got the better end of the stick in a country of 200m+, essentially economically enslaved every one else.

That in any system is an unfair advantage to 0.000124% of the population. By way of wealth, access, influence, power, business and any other way you cut it. You and me and every one else has to reclaim what belongs to us. This sort of un fair advantage typically afforded by access to large, industrial, land, feudal complexes can only be overtaken by building scalable tech companies. The only way to ever be equals is not by how much land we can acquire or how much access to influence we can have, because they already run/own/operate the system and we have to get smart if we want to get our selves and our country out of the current state of disrepair  it is in.

For the rest of us the game from NERO to NRO will only end well if are able to build value by virtue of large scale disruptors. We have no other edge and no other resources besides the god given ability to level the playing field by applying our intelligence with a view to scale faster, more quickly than the generational reliance of these guys and turn the balance of power in our favor.

For every Unicorn you build, you impact the lives of thousands of people, that is the only way to take on the industrial/feudal/political complex and their un fair advantages garnered over the course of history. The only way to change history, is to make history by coming up with ideas and executing those that will disrupt the status quo, there is no other way any one can compete with the established brands, family franchises, politicians, bureaucrats and those in uniform because they gamed the system from inception. The only thing to do, is to the change the game in town and make it your own.